Is modern corporate capitalism hostile to genius?

14th October 2011

…so writes Arun Motianey in today's FT. He believes that modern corporate capitalism is hostile to genius. It rewards on the basis of hitting targets that are determined by, and visible to, everyone else in the market. Genius, instead, requires a vision beyond the mere meeting of targets: "I am talking about the credo of meritocracy. Wouldn't meritocracy breed mediocrity because it requires conformity?" If people see what others cannot see, capitalism is not accommodative.

The letter was in response to John Kay's obituary of Steve Jobs. In it, he quotes Arthur Schopenhauer, the nineteenth century philosopher, that: ‘talent hits the target others cannot hit; genius hits the target others cannot see'. He adds: "Albert Einstein, whose name would in the following century become synonymous with genius, illustrated Schopenhauer's definition. Other clever physicists derived brilliant solutions to complex problems which had bemused less talented men. But Einstein solved problems that others had not really understood existed."

The obituary itself prompted plenty of discussion on the nature of genius: atimoshenko was typical of the prevailing view: "This is the essence of Jobs's genius – he did not recognise and follow where consumer preferences were going, he knew where they would go. The hallmark of genius is reaching a conclusion that is self-evident in hindsight, but that no one else reaches at the time. This is what Schopenhauer meant when he talked about hitting targets that no one else can see."

But the question of whether capitalism facilitates that process or hinders it is a thorny one: Certainly Jobs was rare in being to combine big bucks capitalism with innovative design. Reckitt-Benckiser is another success story, but it is one of just a few. There is a sense that many larger companies are outsourcing the innovative part of their business to smaller capitalisation, more dynamic businesses. This happens across a broad range of industries – from pharmaceuticals to technology. This appears to be a tacit admission that larger companies find it difficult to innovate.

This study by the Wall Street Journal proposes four situations in which outsourcing the creative part of a business is appropriate: When companies would need to add lots of new knowledge to innovate; In the early stages of a project, when there are lots of technical hurdles to be overcome; When intellectual property isn't well protected in the industry; and when companies have had lots of experience with outsourcing. The research also found that outsourcing is fraught with problems if approached unsystematically.

This site argues against the separation of creativity and corporate issues. It says: "Just as management was for the sake of management during the managerial capitalism, and finance was for the sake of finance during the financial capitalism, we may see the creativity for the sake of creativity in this new form of design capitalism. If that happens, instead of finding its panacea, management might have discovered the most powerful painkiller it has ever found. And, alas, that is design."

Genius is a dangerous word in the context of capitalism. Just as it went spectacularly right in the case of Steve Jobs, it went spectacularly wrong in the case of Long Term Capital Management (prompting the book ‘When Genius Failed'). Too many geniuses were arguably at the root of Enron's problems as well.

Clearly genius can be realised within the confines of a capitalism system, but capitalism naturally places some checks and balances on it. That is not necessarily a bad thing.

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